CIMB Kalbe Farma

Quick takes - Value-enhancing move - by Erwan Teguh
(KLBF IJ / KLBF.JK, OUTPERFORM - Maintained, Rp1,050 - Tgt. Rp1,170, Healthcare)

Kalbe has offered to buy 31.81% of Enseval at Rp870/share. The offer is valid for 30 days, amounting to Rp631bn if all are subscribed and bringing Kalbe's stake in Enseval to 90% from 58.19%. This acquisition could boost Kalbe's earnings by 12% or an additional Rp123/share based on Kalbe's present P/E multiple. Enseval shareholders may ask for better valuations, and we believe that Kalbe should pursue further given the strong growth outlook of Enseval. We maintain our forecasts pending the completion of the tender offer but now accord Kalbe a higher target price of Rp1,170 (from Rp1,050), effectively factoring in an ownership of up to 90% of Enseval. Maintain Outperform.